China Merchants Securities (600999): Investment income surpassed last year’s wealth management transformation and accelerated

China Merchants Securities (600999): Investment income surpassed last year’s wealth management transformation and accelerated

Event China Merchants Securities released its 2019 Interim Report in the first half of 2019, and the company achieved operating income of 85.

400,000 yuan, +78 a year.

44%; net profit attributable to mother was 35.

03 ten percent, +93.

89%, ROE 4.


As of the end of the first half of 2019, the company returned to its parent shareholders’ equity of 807.

23 trillion, +1 earlier.

88%; BVPS10.

04 yuan / share.

A brief comment on the growth of investment income in 2019H1 over 2018 has helped the increase in performance.

(1) Benefiting from the market recovery, the company realized investment income (including changes in fair value) in the first half of the year34.

USD 6.2 billion per year + 258%; according to the statement of profit statement, the proportion of net income from corporate brokerage / investment bank / asset management / investment / interest in operating income in the first half of the year was 25% / 8% / 6% 41% / 1%.

(2) In the first half of the year, the company actively carried out debt financing and sold 867 repurchases at the end of the half year.

470,000 yuan, +41 from the beginning of the year.

59%; bonds payable 672.

02 trillion, +25 from the beginning of the year.


The company’s leverage ratio was 3 at the end of 2018.

17 times to 3 at the end of 2019H1.

48 times, driving ROE by 2 of 2018H1.

16% increased to 4 in 2019H1.


Self-operated business: Unified management department to enhance performance 杭州桑拿 stability.

In the first half of the year, the company established a financial market investment headquarters, through unified resource allocation, investment decision-making and risk management.

In terms of equity investment, the company’s directional business focused on expanding operations on the basis of maintaining a sound configuration. The neutral investment business was actively developed through transformation and hedging. At the end of half a year, the company’s proprietary equity securities and their derivatives were 132.

43 trillion, +12 from the beginning of the year.


In terms of FICC investment, the average daily market-making volume of corporate bond market in China ranks 11th. In May, it became one of the first batch of 8 government bond futures market makers in the market.

750,000 yuan, +16 from the 杭州夜网论坛 beginning of the year.


Brokerage business: Market share rebounded, accelerating the pace of wealth management transformation.

(1) In the first half of the year, the company had a net increase of 15 sales offices, and the number of normal trading customers was 1,133.

940 thousand households, an increase of 19 in ten years.

65%; stock base transaction value 5.

95 trillion yuan, +38 a year.

84%, a market share of 3 compared with the same period last year.

91% increased to 4.14%.

(2) The company increased marketing and promotion of the transaction wealth management plan, optimized the package service content, and the transaction volume of customers of the wealth management plan was 9,540.

99 ppm, +22 a year.

57%; non-transactional wealth management strives to meet the diversified asset allocation needs of customers. In the first half of the year, the company sold 4,642 wealth management products.

09 million yuan, ten years +9.


Credit business: Expanding scale and strengthening risk control are both right.

As of the end of the first half of the year, the company’s margin financing and securities lending business balance was 461.

410,000 yuan, an increase of 19 from the end of 2018.

29%, the overall maintenance guarantee ratio reached 301.

07%; the stock pledge business at the end of the period is 299.

1.4 billion, the overall compliance guarantee ratio reached 277.

70%, of which the balance of own capital contribution is 177.

29 trillion, the overall performance guarantee ratio reached 339.


Investment Banking Business: Grasp the outlets of the science and technology board and consolidate debt-competition competition.

Equity transfer agreement, the company focused on “hard technology” high-quality science and technology innovation enterprises, vigorously promoted the industrial transformation of the business, promoted the customer list system and comprehensive performance evaluation, the first half of the initial public offering underwriting scale.

79 trillion, +37 a year.

43%, ranking third in the industry; refinancing is severely affected by regulatory trends, with an underwriting amount of 41.

950,000 yuan, at least -51.


In terms of bond underwriting, the company continued to consolidate the market share of its superior products. In the first half of the year, the company’s main underwriting amount of bonds (including self-run issuance) was 2006.

87 trillion, ten years +18.

52%, ranking 4th in the industry; of which, the underwriting amount of asset-backed securities is 1021.

09 ten percent.

60%, market share 13.

97%, ranking first in the industry.

Asset management business: Continue to transform to active management.

In the first half of the year, China Merchants Asset Management launched the industry’s first batch of new strategic products for science and technology innovation, and perfected the star FOF product lineage.

As of the end of the first half of the year, the total asset management scale of China Merchants Asset Management was 6,347.

55 trillion, compared with the beginning of -11.

03%, ranking 5th in the industry; of which, the scale of active management (excluding ABS) is 1513.

09 trillion, accounting for 23 of the total scale.


Investment suggestion: “Buy” rating.

The performance of the securities brokerage sector in 2019 will continue to benefit from the easing of liquidity and the catalysis of capital market reforms. The long-term market is worth looking forward to; the industry’s supply-side reforms continue to advance, and capital strength improves (the net asset ranking in 2018 ranks 6th in the industry), and wind control is perfect (China Merchants Securities, which has received a Class AA rating from the China Securities Regulatory Commission for 10 consecutive years and has improved innovation capabilities (wealth management, main brokerage, and product creation-leading business) will be one of the beneficiaries.

We expect China Merchants Securities to have a BVPS of 10 in 2019-2020.

14 yuan, 10.

77 yuan (consideration of replacement of BVPS by rights issue), corresponding to a current total PB of 1.

59X, 1.50X, give “Buy” rating.

Risk warnings: stock market recovery fails to meet expectations; marginal easing of monetary and credit policies fails to meet expectations; capital market reform progress does not meet expectations.